Winseck, Dwayne. "Financialization and the “Crisis of the Media”: The rise and fall of (some) media conglomerates in Canada." The Political Economies of Media: The Transformation of the Global Media Industries. Ed. Dwayne Winseck and Dal Yong Jin. London: Bloomsbury Academic, 2011. 142–166. Bloomsbury Collections. Web. 2 Oct. 2021. .

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Copyright © Copyright in the collection and in any introductory and concluding materials © Dwayne Winseck and Dal Yong Jin 2011. Copyright in the individual chapters © the Contributors 2011. You may share this work for non-commercial purposes only, provided you give attribution to the copyright holder and the publisher, and provide a link to the Creative Commons licence. 6 Financialization and the “Crisis of the Media” The rise and fall of (some) media conglomerates in Canada

Dwayne Winseck Carleton University

his chapter examines the crosscutting dynamics that have reshaped the Tnetwork media industries in Canada over the course of the past 15 years, with occasional glances back to the 1980s. Three questions are at its core: First, do new digital technologies, especially the internet, pose fundamental threats to well-established media players or create a larger media economy within which they can expand? Second, have media markets become more concentrated or less? Third, are the media “in crisis”? I argue, fi rst, that the media economy has grown substantially and that the rise of new players such as YouTube (Google), Apple, Facebook, MySpace (News Corp.), and Wikipedia has been especially strong in Canada and added to the media economy, without cannibalizing the economic base of traditional media. Second, I show that the media have become more concentrated and that a half-dozen media conglomerates now form the centerpiece of the network media economy in Canada. Adding four other second-tier fi rms to the list yields what I call the “big 10” media fi rms: Rogers, Shaw, Quebecor, CTVglobemedia, Bell, Canwest, Torstar, Astral Media, Canadian Broadcasting Corporation (CBC), and Cogeco. Finally, I argue that massive increase in the capitalization of media fi rms since the mid-1990s has fundamentally altered the organizational structure of media fi rms and the “operating logic” of the media industries overall (Bouquillion 2008; Miège 1989). The media are in a heightened state of fl ux, but I argue that the current woes besetting some media enterprises are not primarily due to the steady onslaught of the internet or declining revenues as advertising shifts from “old” to “new” media. Instead, I argue that contemporary conditions refl ect a short-term, cyclical decline in advertising caused by the

142

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economic downturn, the accumulated results of two waves of consolidation (1995–2000 and 2003–7), and the “fi nancialization of the media.” The concept of fi nancialization directs our attention to the capitalization of the media industries alongside the traditional focus of critical media political economy on media ownership, markets, regulation, commodifi cation, digitization, and so on. The concept highlights the extraordinary growth in the size of the fi nancial sector and fi nancial assets relative to the industrial and other sectors of the economy over the past 25 years, especially since the mid-1990s. These developments have been enabled by the steady liberalization of fi nancial markets, the search for new modalities of capital accumulation in the face of persistently low levels of overall economic growth in the Western capitalist economies since the 1970s, the rapid growth of network information and communication technologies, and accelerated global fl ows of capital. It also refers to a condition where fi nancial capital and, crucially, financial models drive the strategies and evolution of the rest of the economy, as has been especially evident with respect to the telecom, internet, and media sectors globally and, as this chapter demonstrates, in Canada (Duménil and Lévy 2005; Foster and Magdoff 2009; Phillips 2009). Paying close attention to the dynamics and discourses of fi nancialization also offers a potential bridge between critical political economy and critical cultural political economy insofar as it highlights how the discourses and models of fi nancial actors constitute an image of reality around which fi nancial actors organize their behavior, including allocating enormous sums of capital investment to fi nancial market trading, mergers and acquisitions, corporate restructuring, and so forth—even if the desired aims fail to materialize or, worse, lead to calamitous consequences, as attested by the ongoing global credit crisis that began in 2008 (Jessop 2008; Sayer 2001; Thompson 2010a). The logic of fi nancialization is particularly important to recent developments across the media industries because it has, paradoxically, not only created greater media concentration but also bloated media giants that have sometimes stumbled badly and occasionally been brought to their knees by the two global fi nancial crises of the twenty-fi rst century (2000–2; 2008–). Indeed, several bastions of the “old order” assembled just before or after the turn of the millennium subsequently have been restructured (Bertelsmann, ITV) or dismantled (AT&T, Vivendi), have collapsed in fi nancial ruin (Canwest, Craig, Kirch), or have abandoned early visions of convergence altogether (Bell Globemedia, Time Warner). The woes of these entities offer a cautionary tale regarding the impact of fi nancialization on the media, rather than a tale in which the internet, changing media behaviors, and declining advertising have precipitated a “crisis of the media.” These trends are global in scope, but as this chapter shows, the conditions in Canada are unique (Scherer 2010).

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A bigger pie? The vast expansion of the network media economy, 1984–2009

That the media are in crisis often appears to be a given, with no shortage of examples that seem to prove the case. To take just a few of these for examples, Canwest and CTVglobemedia closed several television stations in 2009, while workers of the former acquired one of its stations in Victoria, BC, and another in Hamilton, Ontario, was sold. TQS, the second largest private French- language television network, was sold to Remstar in 2008 by the consortium of Cogeco, the Canadian Imperial Bank of Commerce (CIBC), and BCE that had previously backed the beleaguered network. Even the CBC’s advertising revenue dropped signifi cantly in 2007–8. Profi ts for private conventional television fell to zero in 2008, and revenues declined from $2.2 billion to $2.1 billion (Canadian Radio-television and Telecommunications Commission (CRTC), 2009b). Daily newspapers also seem to have been hit hard, and several—National Post, Brockville Recorder and Times, The Chatham Daily News , and The Daily Observer (Pembroke)—pared back their weekly publishing schedule in 2009 from 6 days to 5. Newspaper revenues declined slightly, and daily circulation fell yet again from 4.3 to 4.1 million between 2008 and 2009 (Canadian Newspaper Association (CNA) 2010). A slew of layoffs by Rogers at its Citytv stations in 2009 and 2010 (140 jobs), CTVglobemedia in 2009 (248 jobs), and Canwest in 2008 (500 jobs) and 2009 (an additional 15 percent cut in the workforce or 1,400 jobs) only seems to reinforce the view that a secular wave of destruction has pummeled the traditional media (Canwest 2009; Toughill 2009). Broadcasters’ incessant pleas to the CRTC to shore up their supposed faltering economic base have been met with several modest initiatives, including the implementation of a “local programming improvement fund,” more fl exibility for broadcasters to negotiate fee-for-carriage arrangements with cable and satellite distributors, permission to include advertising in video-on-demand services, and a willingness by the regulator to entertain the potential for all television distributors—including currently exempt internet service providers, wireless service providers, and content aggregators such as Apple, Google’s YouTube, and Zip.ca—to be required to fi nancially support Canadian content (CRTC 2009c, 2010).1 At the same time, the regulator’s decisions regarding “network neutrality” and media concentration have favored established telecom and media providers, on the dubious grounds that they possess the deep pockets and inclination to invest in network infrastructure and high-quality journalism and programming (CRTC 2008, 2009d). Clearly, the “media in crisis” argument is being mobilized, but policy responses thus far have been subdued relative to the anguish hanging over the press in the United States and television news in Britain or relative to the $850 million newspaper bailout in

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France in 2009 (Benkler, Faris, Gasser, Miyakawa, and Schultze 2010; Nichols and McChesney 2009; Scherer 2010). It is one thing, however, to recognize that the media industries face tumultuous times but another altogether to see current conditions as cataclysmic (Picard 2009). In fact, notions that the media are in crisis must contend with the reality that they have grown immensely over the past 25 years, as Figure 6.1 demonstrates. 2 Figure 6.1 indicates that the total telecoms and network media economy expanded enormously over this period. In real dollar terms adjusted for infl ation, the size of the media economy in Canada expanded from $38 billion in 1984 to $56.6 billion in 2000 to $73.6 billion in 2008.3 Even after removing the wired and wireless telecoms sectors, the remaining seven sectors of what I call the network media industries—television, cable and satellite distribution, newspapers, internet access, internet advertising, radio, and magazines— expanded substantially from $21.4 billion to $32 billion between 2000 and 2008. Newspaper revenues have stayed fl at; almost all sectors of the media have survived well (radio, television, magazines), while some have fl ourished (cable and satellite television); and internet access and internet advertising have exploded. The decline in wired telecoms from 2000 to 2008 is substantial, but not without precedent (e.g. 1984–92), and it has been offset by the immense growth in wireless and internet services. In fact, almost all new revenue from the latter services goes to incumbents: BCE, Telus, Manitoba Telecom Services

28,000 26,000 24,000 22,000 20,000 18,000 Wired telecom 16,000 Wireless telecom Internet access 14,000

(Millions, $) (Millions, Magazines 12,000 Radio 10,000 Television 8,000 Newspapers Internet 6,000 advertising 4,000 Cable & 2,000 satellite TV 0 1984 1988 1992 1996 2000 2004 2006 2008 Figure 6.1 The growth of the network media economy, 1984–2008 Sources: CRTC, Communication Monitoring Report, 2009a and various years; Canadian Newspaper Association, Ownership of Canadian Newspapers , 2009 and various years; Internet Advertising Bureau, Canada Online Advertising Revenue Survey, 2009; Corporate Annual Reports.

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(MTS), SaskTel, Rogers, Shaw, Quebecor, and Cogeco. These fi rms are not in crisis. Claims that television is in desperate straits typically highlight the relative decline of conventional advertising-supported television, where profi ts fell from 11 percent in 2005 to 5 percent in 2007 to zero in 2008. This argument is disingenuous. For one, it confuses short-term events with long-term patterns. Profi ts for conventional television hovered between 10 and 15 percent from 1996 to 2006 and have declined for only the 2 most recent years. In addition, revenues have been steady for the past half a decade and have not fallen except for a slight decline in 2008. Moreover, the television universe as a whole has grown enormously. New distribution channels, as well as cable and satellite television, pay-per-view, video-on-demand, the internet, and so forth, have proliferated and are exceptionally lucrative. There were 48 cable and satellite television services in 2000; today there are 189. Indeed, revenues for these services ($3.1 billion) in 2008 were nearly four times those of a decade ago and slightly less than those for conventional television (if the CBC’s annual subsidy is included) (CRTC 2004, 2009a). Overall, profi ts for specialty- and pay-television services have hovered between 21 and 25 percent annually since 2002—roughly two-and-a-half times the rate of profi t for all industries as a whole and equaled by just three other economic sectors: banking (25.2 percent), alcohol and tobacco (23.6 percent), and real estate (20.9 percent) (Statistics Canada 2010a). Even at the height of the fi nancial crisis in 2008 and 2009, specialty- and pay-television profi ts were 22 and 23 percent, respectively. Cable and satellite distributors are equally lucrative (CRTC 2004, 2009a). As a whole, the television universe has expanded from a $5 billion market in 1984 to $10.1 billion in 2000 and $13.9 billion in 2008 (see Figure 6.1). Thus, television is not in crisis but one of the fastest growing and most lucrative sectors of the economy! The newspaper business offers the most challenging test to the arguments that I am making, but its current state is better described as a continuation of long-term trends, rather than a crisis. Picard (2009) and Goldstein (2009) argue that daily newspaper circulation has been in long-term decline relative to the total population in the United States, Britain, and Canada since the 1950s, partly due to the steady rise of new sources of news over this period (e.g. television beginning in the 1950s, cable news channels in the 1980s, and the internet in the 1990s). Measured in absolute terms, however, daily circulation in Canada rose until 2000, when 5 million copies were sold, before falling to 4.7 million in 2005 and 4.1 million in 2009 (CNA 2010; Goldstein 2009). There has been no downward spike in circulation attributable to the advent of the internet. In fact, there are indications that the tide is turning as internet newspaper readership begins to yield some new subscribers. The catch, of course, is that internet audiences are worth a tiny fraction of the value of “hard-copy” readers. Still, the Project for Excellence in Journalism (PEJ) lays a good part of the blame for the state of the press on a complacent industry that

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has been slow to adjust to the internet over the past decade (Picard 2009; PEJ 2009, 2010; Zamaria and Fletcher 2008). Newspaper revenues in Canada have not plunged. They fl uctuated between 1984 and 1992, grew steadily afterward from $3.9 billion (1992) to $5.7 billion in 2000, then fell to $5.5 billion in 2008. In addition, with operating profi ts of 12 to 15 percent between 2000 and 2008, newspapers are comparatively profi table outlets for investment (Statistics Canada 2010b). The profi ts for Torstar—owner of the Toronto Star and closest to a “pure” newspaper publisher in Canada—ranged from 16 to 18 percent annually between 2000 and 2005, then declined from 13 to 14.5 percent between 2006 and 2009. Looked at from a slightly different angle, however, the image of the press and media industries being in peril did have some basis in reality in recent years as net profi ts and return on equity plunged briefl y for Astral (2009), Canwest (2008–9), Cogeco (2009), Quebecor (2007–8), and Torstar (2008). These are 5 of the top 10 media fi rms in the country, and therefore this is signifi cant. Except for Canwest, however, the shock was short, sharp, and confi ned to 1 or 2 years between 2007 and 2009, depending on the fi rm. Figure 6.2 illustrates the operating profi t trends for the top eight fi rms in the network media industries from 1995 to 2009. As this fi gure shows, mid- and long-term profi ts for Canada’s leading media companies have been high, not

30

25

20

15

10

5

0 1995 1997 1999 2001 2003 2005 2007 2009 −5

−10 Torstar Quebecor −15 BCE −20 Astral Shaw −25 Cogeco −30 All industries Canwest −35 Rogers Figure 6.2 Big eight media companies’ operating profi ts, 1995–2009 Sources: Company Annual Reports; Bloomberg Professional; Statistics Canada (2010a and various years), Financial and Taxation Statistics for Enterprises.

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low. Moreover, it also indicates that the occasional woes of some media fi rms have been transitory and have coincided with the two economic crises of the past decade, suggesting that broad economic forces, not the internet, are the source of their problems. Indeed, recent troubles have been compounded by their close proximity to the crash of the telecom–media–technology (TMT) bubble between 2001 and 2003 (Picard 2009). Clearly, the network media economy has not shrunk, but it has grown and consistently allowed companies to achieve well-above-average profi ts. The pleadings of the industry, however, begin to make a bit more sense once we realize that some of the overall growth that has occurred has been ambiguous in the sense that it has occurred not in terms of money but time . Indeed, “total media time” for internet users (over three-quarters of the population) surged from 46 to 62 hours per week between 2004 and 2007 (Zamaria and Fletcher 2008). Canadians have long been intensive media users, and this is still the case, as their use of the internet, online video, social networking, and blogs exceeds that of their counterparts in Britain, France, Germany, and the United States, although the growth of the media economy “in time” is also visible in these and other countries (Benkler et al . 2010; “Changing the Channel” 2010; Comscore 2009). A steady rise in spending on connectivity further highlights this trend, while spending on media content and cultural goods, conversely, has stayed remarkably fl at for the past quarter of a century, as Figure 6.3 shows.4

5.0 Connectivity Media content and cultural goods 4.5

4.0

3.5

3.0

2.5

2.0

1.5 % of household spending

1.0

0.5

0 1982 1986 1990 1992 1996 1998 2000 2002 2004 2006 2008 Figure 6.3 Relatively constant media expenditures and “bandwidth kings,” 1982–2008 Sources: Statistics Canada (2008 and various years), Survey of Household Spending (Catalog No. 62M0004XCB). Ottawa: Statistics Canada.

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The fact that spending on content and cultural goods in 2008 was the same as it was in 1982 (2.4 percent) suggests that people are using “bandwidth” and “connectivity” for their own purposes rather than consuming more commercial media content. If so, bandwidth, not content, may be king in the network media ecology. Such trends also coincide with the growing visibility of “mass self-expression” (Castells 2009) and the “social economy of information” that has been enabled by distributed networked media (Benkler 2006). This is an important point because it helps to illuminate the “multiple economies” of the network media ecology. As Aristotle observed over 2,000 years ago, the production of things , in this case communication and media goods, does not have a singular purpose. Instead, we create things for ourselves (self-production), for exchange (markets), and for others (the community). It may be this reality that is essential to grasping the relationship between the commercial network media economy, mass self-expression, and the social economy of information. In other words, the growth of self-production and the social economy of information are likely behind traditional media players’ concerns that they are being deprived of their “fair share” of the “new media economy.” But if Aristotle was right, then the greater mediation of everyday life has only brought to the fore the multiple economies of cultural production that were already there. While this may be a diffi cult concept to wrap our minds around, Wikipedia can usefully be seen as the poster child for some of its core values. The collaborative online encyclopedia was launched in 2001 with 800 “stubs” to be developed by volunteer contributors. By 2010, it held more than 15,000,000 articles written in 270 languages by 91,000 regular contributors—all based on values of “self- production,” shared editing, and an alternative model of property, that is, the GNU Free Documentation License, which lets everybody use one another’s work and even download the entire database for free. Canadians, on a per capita basis, are generous contributors to the venture (Wikipedia 2010). All in all, these trends express the multiple economies of digital capitalism, and while nestled fi rmly within the “belly of the beast,” so to speak, they should not be confl ated with the logic of market exchange. The key point is that these trends add to the media economy, rather than taking away from it. People are using traditional media somewhat less, but this applies to all media users. As Zamaria and Fletcher (2008) observe,

Online activities appear to supplement rather than displace traditional media use. In general, new media … activities are being added to an existing media diet that includes substantial time spent with conventional media, even for youth and younger internet users. (Zamaria and Fletcher 2008: 9)

The Canadian television industry has been slow off the mark in coming to terms with these new realities, but this may be beginning to change. Perhaps this complacency is not all that surprising, given that only 3 percent of television viewing occurs on the internet, while mobile devices account for much, much

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less (CBC/Media Technology Monitor (MTM) 2009; “Changing the Channel” 2010). Yet “digital download stores” (e.g. Apple), content aggregators (e.g. Google’s YouTube), and peer-to-peer networks (e.g. BitTorrent) are expanding rapidly, albeit from a low base, and a fl urry of activity is occurring that will shape the future of the media. Indeed, there have been many attempts to transform nascent trends into viable services. The BBC’s iPlayer, created in 2008, now obtains 70,000 views a day, and Hulu, the jointly owned internet television service of News Corp., Disney, and NBC-Universal, is now one of the leading online video services in the United States. None of these ventures, however, is profi table, others have folded (Joost), and still others are expected to be short-lived (Netfl ix) (CBC/MTM 2009; Canadian Film and Television Production Association (CFTPA) 2010). Broadcasters in Canada fi nally joined the fray in 2007/8 when they began their own substantial video portals in a sustained way (e.g. CBC.ca, CTV.ca, and GlobalTV.com) and started to offer programs through Apple’s iTunes store and YouTube. Behind-the-scenes clips also increasingly accompany scheduled fare, although imported programs such as “The O.C.” (aired by CTV) are more likely to use Facebook, YouTube, and MySpace pages than Canadian programs. “Degrassi: The Next Generation” (CTV), “Star Académie” (Quebecor’s TVA), and the independently produced “Sanctuary” are notable, but extremely rare, exceptions (Grant 2008; Miller 2007; Nordicity 2007). The main thrust, however, has been to prevent the rise of the internet as an alternative medium for television. To this end, telecom and cable providers restrict peer-to-peer traffi c and regulate their networks with a heavy hand, as the CBC discovered when Bell hobbled its attempt to use BitTorrent to distribute an episode of “Canada’s Next Great Prime Minister” in 2008. Geo- gating and content rights management technologies are also being used to shore up “national borders.” The US cable companies’ “TV Everywhere” strategy is an excellent example of this. Created in 2009, it was quickly imported by Bell and Rogers as the basis for their own broadband video portals. Broadcasters have offered more programs to these services in response but, as in the United States, exclusively to existing cable and satellite subscribers. Geo-blocking and content rights management technologies are also being used to preserve the window-based model that has forever been central to the television and fi lm industries, where the release of fi lms and television programming is staggered over time and across territorial borders in order to maintain separate markets for the theater, specialty and pay TV, DVD, conventional television, and so on. Deals have been struck with Google, Apple, ISPs, wireless service providers, and so on, but they have been hedged by broadcasters’ demand that the CRTC require all of these “new media” providers to contribute to Canadian television production funds (CRTC 2009c; Grant 2008; Miller 2007). Of course, Google Inc. (2009) and Apple Inc. (2008), with ISPs at their side, staunchly oppose such a move, arguing that they offer

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additional channels of distribution that benefi t not just traditional commercial media providers but independents and the hordes of people involved in mass cultural production.

Financialization and consolidation of the network media industries

Instead of investing in cutting-edge network infrastructure and adapting to new media forms, incumbent media and telecom fi rms have mostly spent the past decade and a half amalgamating and subsequently retrenching under the weight of fairy-tale levels of capitalization, enormous debt, and dubious business strategies (Benkler et al . 2010; Organisation for Economic Co- operation and Development (OECD) 2008). The process of consolidation is usually explained as a response to new digital technologies, permissive regulation, and globalization, but the fi nancialization of media is another phenomenon that has arguably been even more important and understudied. Kevin Phillips (2009) defi nes fi nancialization as a function of the swelling role of the fi nancial sector in the United States from 11 to 12 percent of GNP in the 1980s “to a stunning 20–21 percent … by 2004–2005 … while manufacturing slipped from about 25 percent to just 12 percent” (Phillips 2009: xiii). Duménil and Lévy (2005) highlight “the tight and hierarchical relationship between industrial capital and banking capital” as its signature feature. Foster and Magdoff (2009) defi ne it as the growing reliance of the economy on the fi nancial sector in response to general economic stagnation and overproduction—the “normal state of the monopoly capitalist economy” (Foster and Magdoff 2009: 14) but also a source of chronic instability. Crotty (2005) and Shiller (2001) argue that such processes have been pronounced in the telecom, media, and internet sectors, with detrimental effects (“The Great Telecoms Crash” 2002). The fi nancialization of the media and telecom industries also occurred in Canada in the latter half of the 1990s, as investment poured into mergers and acquisitions, yielding huge media conglomerates with unheard-of capitalization levels and enormous debts. Figure 6.4 reveals the spike of acquisitions in the telecoms and media industries between 1996 and 2000 and again, albeit more modestly, from 2003 to 2007 as well as the sharp rise in the market capitalization of the leading media fi rms in Canada.5 Media transactions alone in 2000 ($7.1 billion) were more than eight times greater than 5 years earlier, while telecoms and internet acquisitions were more than 10 times that amount. Indeed, primed by the easy cash of the TMT boom, media convergence, and the permissive policies of the Liberal government, media and telecom companies went on a buying spree. BCE acquired CTV and The Globe and Mail ($3.4 billion) in 2000, and Quebecor bought Vidéotron, TVA, and the Sun “Media” newspaper chain ($7.4 billion) between 1998 and

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55,000 Telecom MA $81.2b (2000) 50,000

45,000

40,000 Telecom M&A 35,000 Media M&A 30,000 “Big 8” market capitalization

25,000 (Millions, $) (Millions, 20,000

15,000

10,000

5,000

0

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Figure 6.4 Mergers and acquisitions in network media industries, 1984–2009 Sources: Thomson Financial, 2009; FPInformart, 2010; Bloomberg Professional.

2001, making it Quebec’s biggest media conglomerate. Canwest purchased Western International Communications ($800 million) in 1998, followed 2 years afterward by the Hollinger newspaper chain and the National Post ($3.2 billion). The capitalization levels of the largest eight publicly traded media fi rms soared alongside these trends, from $8.5 billion in 1995 to $25 billion in 2000. As the TMT bubble collapsed, however, their capital structure tumbled by nearly 45 percent, while rival telecoms and internet fi rms created in the late 1990s went bankrupt or “ceased to exist” altogether (CRTC 2002: 21). This caused a lull of activity, but by 2003–4 the process regained steam. Already struggling to bring its debt under control, Canwest sold several smaller newspapers to Transcontinental and Osprey Media (2002–3). With fi nancing from the US-based private equity fund Providence Equity Partners, Craig Media expanded its modest A-Channel and created a new station, Toronto One (2003). The effort, however, failed; Craig was forced into bankruptcy, Toronto One sold to Quebecor, and the A-Channel system bought by CHUM (2004)—the fi fth largest broadcaster in Canada and owner of Citytv. That too was short-lived, however, and the debt-laden CHUM was sold after its founder’s death to Bell Globemedia in 2006 ($1.6 billion). But even Bell Globemedia was in disarray, and the company abandoned its convergence strategy by scaling back its stake in CTV and The Globe and Mail (from 71 to 15 percent) in late

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2006 and selling its stake in TQS the next year. A re-branded CTVglobemedia emerged from this restructuring with the Thomson family at the helm (40 percent) and the Ontario Teachers’ Pension Fund (25 percent), Torstar (20 percent), and Bell (15 percent) all holding minority interests.6 The last step in this tangled web of affairs occurred as the CRTC allowed CTVglobemedia to keep the A-Channel stations as well as the specialty- and pay-television services that it had acquired from CHUM but forced it to sell the Citytv stations (CRTC 2006). Rogers snapped them up within the year ($375 million). Three other transactions occurred in 2007 that set the course for the rest of the decade. Astral Media bought Standard Broadcasting. Osprey was sold to Quebecor. Lastly, Canwest and the New York–based investment bank Goldman Sachs bought Alliance Atlantis for $2.3 billion. The CRTC blessed this transaction based on the fi ction that Canwest maintained ownership control of the entity as required by the Broadcasting Act’s foreign-ownership rules, despite the fact that Goldman Sachs held two-thirds of the equity in the acquired specialty- and pay-television services, and with few qualms for the rise in concentration the deal entailed. Some argued that the huge debt levels involved would not be sustainable and that the increased media concentration that would result was unacceptable. This was all for naught, however, and Canwest’s takeover of Alliance Atlantis gave it ownership of 13 specialty- and pay- television channels (such as BBC Canada, HGTV, National Geographic, and Showcase). Goldman Sachs assumed half the stakes in Alliance Atlantis’ highly touted “CSI” series (with Viacom/CBS holding the other half) as well as a 51 percent stake in its fi lm and television production venture (Communication Energy Paperworkers 2007; CRTC 2007; Goldstein 2007). All in all, media acquisitions neared their dot-com highs and the market capitalization of the leading eight media fi rms outstripped even the levels set in 2000 to reach $53.3 billion, but this fi gure, too, began to plummet with the onset of the global fi nancial crisis of 2008. The scale and speed of these events suggest that the media were swept up not only in the fi nancialization of the economy but also on the cutting edge of this process. The intensity of investment driving media consolidation has been wholly out of proportion to the media industries’ weight in the “real economy.” The dynamics are also important because, as Picard (2002) notes, institutional investors prefer fi rms that possess a reach across many media sectors and a deep treasure trove of content. The outcomes yielded a half-dozen media conglomerates and four other signifi cant entities that now form the “big 10” media fi rms in Canada, as ranked by market capitalization and revenues, outlined in Table 6.1. 7 Table 6.1 highlights the sheer size of the leading media conglomerates, but as Terry Flew (2007) states, this tells us little about whether media markets have become more or less concentrated over time. Others also argue that media

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Table 6.1 The big 10 media fi rms in Canada, 2008 (millions, US$)

Owner Market Total Conventional Specialty Cable & Press Radio Internet capitalization revenue TV & satellite access (2009) (US$) pay TV distribution

Shaw (Corus) Shaw 8,084.2 3,487.6 449 2,040.5 272 726.1 Rogers Rogers 19,440.1 3,238 216.4 402.4 1,500.2 184 240 695 QMI Péladeau 1,750.7 3,284.1 309.9 57.6 1,079.9 1,398.6 438.1 Bell Diversifi ed 1,560.7 2,944.6 51.8 51.8 1,450 1,391 CTVgm Thomson (40%), NA 2,288.1 932.9 806.4 388.8 160 TPF (25%), Torstar (20%), BCE (15%) Canwest Asper 24.9 2,739 608 459.2 1,495.8 176 CBC Public NA 1,590 1,023.2 169.3 397.5 Astral Greenberg 1,780 779.2 456.2 323 Torstar Atkinson, Thall, 500.1 750.6 750.6 Hindmarsh, Campbell, Honderich Cogeco Audet Family (80%), 336.1 888 111.3 2 561.5 213.2 Rogers (20%) Total industries, 31,148.00 3,565.8 3,045 6,953.5 5,400 2,000 6,200 US$ C4 41.6 80.6 71.3 87.6 77.3 61.7 54.6 HHI 615.4 1929 1,588.3 2,094.7 1,819.3 1,151.9 926 6/10/2011 6:44:24 PM Sources: Corporate Annual Reports; CRTC Communication Monitoring Report (2009 and various years); Canadian Newspaper Association (2009 and various years). FINANCIALIZATION AND THE “CRISIS OF THE MEDIA” 155

ownership no longer really matters because most media companies are now owned by shareholders and controlled by managers. As Demers and Merskin (2000) argue, the managerial revolution signals the death knell of the media mogul, and this is a good thing because corporate media managers do not have ideological axes to grind, but they do have deep pockets and the expertise needed to support better media performance and higher quality journalism than owner-controlled companies. Others go even further and argue that the vast expansion of the television universe, explosive growth of the internet, and the rise of YouTube, MySpace, Google, and so on render worries about media concentration anachronistic. Indeed, Benjamin Compaine (2001) assures us that “the democracy of the marketplace may be fl awed, but it is getting better, not worse.” Finally, Kenneth Goldstein (2007) argues that the issue is not concentration but the fragmentation of audiences. Audience fragmentation is a problem because it threatens to yield a tower of babble as strident voices swamp civil discourse and the mutual understanding that democracies depend on to survive (Sunstein 2007). The upshot from all of this is that the media are more competitive and fragmented than ever. Or are they? The fact that all of the “big 10” media fi rms are owner controlled, except Bell and the CBC, suggests that Demers and Merskin’s (2000) case does not fi t the Canadian context. Furthermore, their data from the early 1990s highlight a process of steady, incremental change, whereas the fi nancialization thesis reveals a sharp, dramatic bout of transformation beginning in the latter half of the decade that led to a sharp rise in concentration, albeit without substantially altering the structure of media ownership. To help determine whether the media have become more or less concentrated, I collected data from company reports, the CRTC’s Monitoring Reports, industry associations, and other sources for each sector of the network media between 1984 and 2008 (see Note 2). Data on the number of media owners and market share were gathered at 4-year intervals and then analyzed using concentration ratios (CR) and the Herfi ndahl–Hirschman Index (HHI). The data were then pooled to create a portrait of the network media. The CR method adds the shares of each fi rm in a market and makes judgments on the basis of widely accepted thresholds, with 25 percent market share by three fi rms (C3), 50 percent or more by four fi rms (C4), and 75 percent or more by eight fi rms (C8), indicating high levels of concentration. The HHI squares the market share of each fi rm and then adds them to arrive at a total that will range from 100 (i.e. 100 fi rms each with a 1 percent market share—perfect competition) to 10,000 (one fi rm with 100 percent of a market share— monopoly) (Noam 2009). The US Department of Justice as well as Canadian competition authorities use the following thresholds to help determine whether markets are more or less concentrated:

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HHI <1,000 Unconcentrated HHI >1,000 but <1,800 Moderately concentrated HHI >1,800 Highly concentrated

Overall, the “big 10” media fi rms’ share of all revenues in 2000 and 2008 hovered around 71 to 72 percent in both years—a substantial rise from 61 percent in 1996 and a still further increase from 54 percent in 1992. Taken individually, each sector was highly concentrated in 2008 on the basis of the CR method (Figure 6.6). The picture according to the HHI is slightly more mixed. Cable and satellite distribution (2,094.7), conventional television (1,929), and newspapers (1,819) were highly concentrated in 2008, while specialty- and pay-television services (1,588) and radio (1,151) were moderately so. Only internet access (926) and the network media as a whole (616) were unconcentrated. The pooled network media score rose steadily to 667 in 2000, where it stayed until declining to its current level after BCE and Cogeco scaled back their convergence strategies in 2006–7 and new players (the Thomson family and Remstar, respectively) fi lled the breach. As an aside, Thomson’s takeover of Reuters—the world’s largest news and fi nancial information agency—2 years later transformed CTVglobemedia into a subdivision of the eighth largest global media empire. In short, media concentration has grown in specifi c sectors and plateaued at historically high levels after 2000 for the network media as a whole, with the sharpest increase occurring after 1996. Figures 6.5 and 6.6 illustrate the trends. In some ways, this portrait understates media concentration. The national measure used does not fully capture the extent to which, for instance, Quebecor dominates the French-language media. The shares of media conglomerates in the English-language market would be higher as well if this factor was taken into account but not to the same degree. A web of alliances between key players also blunts the sharp edge of competition. The Globe and Mail and Torstar, for instance, are rivals in some markets, but the latter has a stake (20 percent) in CTVglobemedia and a director on its board. Rogers owns 20 percent of Cogeco and has a director on its board, while CTVglobemedia, Rogers, Quebecor, Shaw (Corus), Astral, and Cogeco jointly own a dozen cable and satellite television channels (CRTC 2009a). Many argue that the internet obviates such concerns, but the internet is not immune to consolidation. Roughly 94 percent of Canadian high-speed internet subscribers gain access from incumbent cable and telecoms providers (CRTC 2009a). Google’s growing dominance of the search engine market further illustrates the trend, where it accounts for 81.4 percent of searches. Trailing far behind are Microsoft (6.8 percent), Yahoo! (5 percent), and Ask.com (4 percent), yielding a CR4 of 97 percent and an HHI of 6,713—far outstripping

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100

90

80

70

60

50 CR4 (%) 40

30 Total network media Conventional TV 20 Pay & speciality TV Newspapers All TV Radio 10 Cable & satellite Internet access distribution 0 1984 1988 1992 1996 2000 2004 2006 2008 Figure 6.5 Network media industries concentration ratios (CR), 1984–2008

2,500

2,000

1,500

1,000

500

0 1984 1988 1992 1996 2000 2004 2006 2008 Total network media Conventional TV All TV Pay & speciality TV Newspapers Internet access Cable & satellite distribution Radio Figure 6.6 Network media industries concentration (HHI), 1984–2008

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the standards of concentration outlined earlier. Social networking sites display a similar trend, with Facebook accounting for 63.2 percent of time spent on such sites, trailed by Google’s YouTube (20.4 percent), Microsoft (1.2 percent), Twitter (0.7 percent), and News Corp.’s MySpace (0.6 percent) (Experien Hitwise Canada 2010). Again, the CR4 score of 86 percent and HHI score of 4,426 reveal that social networking sites are highly concentrated in Canada. Google’s dominance in the search engine market and pivotal place in social networking help to explain why it is such a powerful force in defi ning the relationship between “old” and “new” media. The number of websites, blogs, and so forth continues to proliferate, but the amount of time that internet users spend on the top 10 sites has nearly doubled from 20 percent in 2003 to 38 percent in 2008 (Comscore 2009). In Canada, 8 of the top 15 internet news sites belong to traditional media fi rms: cbc.ca, Quebecor, CTV, The Globe and Mail, Radio-Canada, the Toronto Star , Canwest, and Power Corporation; CNN, BBC, Reuters, MSN, Google, and Yahoo! cover almost all of the rest (Zamaria and Fletcher 2008). A similar pattern prevails in the United States (PEJ 2010), and Chris Paterson (2005) argues that concentration is even higher, given that 40 to 60 percent of foreign stories published by internet news sites originate from Reuters or Associated Press. The problem, therefore, is not the “fragmentation” of audiences, as Sunstein (2007) and Goldstein (2007) fear, but the concentration of attention. While Noam (2009) argues that this refl ects the continued power of money and brands in structuring the internet, Benkler (2006) argues that the concentration of attention on the internet refl ects the workings of “power law distribution.” According to this idea, most networks—communication, social, and transportation—have just a few nodes, blogs, websites, and so on that attract most of the traffi c, attention, people, and so on, after which a steep drop-off occurs, followed by a “long tail” that accounts for ever tinier slices of attention. Benkler believes that this could be a good thing if communication networks remain open and processes of communication and social interaction, versus power and money, function to foster understanding out of the “tower of babble.” While strongly opposed to the trend toward closed and controlled communication networks, he sees popular sites arising out of the internet’s hyperlinking structure, where relevance, credibility, trust, and communities of interest help to organize attention on the internet. The outcome is not ideologically sealed “echo chambers” and a “tower of babble” but a substantial improvement in understanding and knowledge relative to the standards set by the “industrial media” of the past. The upshot, however, is not that this diminishes worries about concentration but that the suppleness of these structuring practices makes maintaining open networks and curbing the infl uence of money, power, and “business models” over network media more important than ever.

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Debt, delusions, and the crisis facing the network media ecology

There is a giant, tangled paradox in all of this in that while media conglomerates have become larger and continue to be very profi table, and markets have become more concentrated, there are obvious signs of disarray all about us. Why? In addition to the impact of two economic crises and excessively capitalized corporate structures, part of the answer lies in the irony that convergence was embraced in Canada precisely as it was losing its luster elsewhere. Indeed, by the turn of the twenty-fi rst century, all the major regional telecom fi rms in the United States —SBC, Bell Atlantic, US West, and BellSouth— had drawn back from the close alliances they had forged with television and fi lm studios over the course of the past decade. Microsoft has also wound down the stakes in cable and telecom systems WebTV and MSNBC that it acquired in the late 1990s, while its CEO, Steve Ballmer, lamented entering the media and telecoms businesses directly as early as 2001 (Olsen 2001). AT&T sold off all of its cable interests in 2003, just 5 years after embracing the “convergence strategy,” and was sold to SBC in 2005. Time Warner is, ironically, the poster child of the failures of convergence, having dropped AOL from its moniker in 2003, sold the Warner Music Group in 2004, labored under fraud charges for years until settling with the Securities Exchange Commission in 2005, and spun off its cable systems in 2008. Indeed, in 2009, its market value stood at $78 billion—about a fourth of its value in 2000, when the merger between AOL and Time Warner was the biggest in corporate history and supposedly a sign of things to come (Time Warner 2009). The collapse of KirchMedia in Germany, the travails of ITV in Britain, and the continued dismantling of Vivendi in France are further examples of crestfallen media conglomerates formed amid the fi n de siécle convergence hype. So too have the “fi eld of dreams” visions of convergence ounderedfl in Canada. BCE’s capitalization soared from $15 billion in 1995 to $89 billion in 1999 but plunged to $26 billion 3 years later (Bloomberg 2010). By the time the renamed CTVglobemedia was sold in 2006, it was worth roughly half of the $4 billion assigned to the venture 6 years earlier (BCE 2003, 2007; CRTC 2006; see Note 6). “Broadband multimedia trials” continue to come and go at other regional telecom providers in Canada, but they play tiny roles in the media. Canwest’s collapse in 2009–10, the sale of its 13 dailies and the National Post to “old hands” in the Canadian newspaper business (Paul Godfrey) backed by a private equity fund in the United States, and the tentative sale of its television operations to Shaw provide yet another example of consolidation gone bad. Quebecor has also struggled with enormous debt, but it has enjoyed considerable success presiding over the star system in Québec, with newscasts that rival those of the CBC’s Réseau de l’information (RDI) and popular programs such as Star Académie . Quebecor’s case also reveals a striking feature

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that applies to all the “big 10” media fi rms: namely, that if profi tability is a good proxy for success, then they have been very successful except for the sharp but short shocks felt by some media companies after the crash of the TMT bubble and the fi nancial crisis of 2008 (see Figure 6.2). Even Canwest has been profi table, sometimes extremely so, every year since 1991 in terms of operating profi ts and all but 2 years (2004 and 2008) in terms of return on equity. The industry’s favorite “bragging rights” measure of profi t—earnings before interest, taxes, depreciation, and amortization (EBITDA)—also reveals that its profi ts were in the low- to mid-20 percent range for the past decade before falling to 16 percent on the eve of its demise in 2009. How is it possible for highly profi table fi rms to be in such disarray? The answer is debt. Figures 6.7 and 6.8 put the issue of debt in historical perspective. As Figure 6.8 illustrates, the mountain of debt acquired by the eight major media companies soared from $8.8 billion in 1995 to $24.8 billion in 2001 and continues to hang about the industry to this day. There are no hard-and- fast rules as to when there is too much debt. However, Figure 6.8 demonstrates a clear break with historical norms after the mid-1990s, although Rogers and Quebecor were already pacesetters for the trend to come. Likewise, there are no fi xed rules regarding appropriate debt-to-equity ratios; however, historical norms and informed views provide a useful guide. Before 1996, most fi rms maintained a debt-to-equity ratio of less than 1, and this is still the case for Astral and Torstar, which are considered to be fi scally conservative entities. The Bank of Canada (2009) gives a sense of appropriate debt levels when it applauds

9,000 Astral BCE 8,000 Rogers Canwest 7,000 Shaw Cogeco 6,000 Torstar 5,000 Quebecor

4,000 (Millions, $) (Millions,

3,000

2,000

1,000

0 1990 1992 1994 1996 19982000 2002 2004 2006 2008 Figure 6.7 Leading media fi rms and debt, 1990–2008 Sources: Company Reports; Bloomberg Professional.

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9.0 Astral Shaw Quebecor Rogers 10.8 BCE Canwest All industries’ AVG 8.0 Rogers Torstar Cogeco

7.0

6.0

5.0

4.0 Debt/equity

3.0

2.0

1.0

0 1990 1992 1994 1996 19982000 2002 2004 2006 2008 Figure 6.8 Leading media fi rms and debt-to-equity ratios, 1990–2008 Sources: Company Reports; Bloomberg Professional.

the decline of corporate leverage from over 1 in the early 2000s to roughly 0.85 in 2009, while urging an even greater return to corporate fi scal probity. William Melody (2007b) argues that a debt-to-equity ratio above 80 percent “is unsustainable in the long term [and that] running a fi rm’s debt up to an unsustainable level … is simply acquiring short-term cash at the expense of long-term development and increased fi nancial risk and costs” (Melody 2007b: 2). According to this standard, most major media fi rms in Canada throughout the 2000s, except Astral, Torstar, and to some extent BCE, have been bloated corporate entities, run as “cash cows” rather than companies capable of sustained investment and innovation. Indeed, while the cost to specifi c fi rms has been high, the cost to the economy, society, journalism, and the network media ecology has been higher, as the following discussion illustrates. At the end of the 1990s, a slew of new rivals in telecoms and the internet did lead to an unprecedented surge of investment in network infrastructure that put Canada near the top of “global league” rankings for basic communication and broadband internet services. Most of those rivals vanished long ago, however, and their facilities were absorbed by the incumbents (CRTC 2002). The result has been stagnating investment in network infrastructure and weak competition, buttressed by weak regulation and policies. As a result, in the past decade, Canada fell to the middle or bottom of the rankings relative to other OECD countries in terms of the state of high-speed broadband networks; wireless connectivity; bundled telephone, cell phone, television, and internet services; and public Wi-Fi services (Benkler et al . 2010). Figure 6.9 charts long-term investment trends in network infrastructure.

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10,000.00 9,000.00 8,000.00 7,000.00 6,000.00 5,000.00 4,000.00

(Millions, $) (Millions, Telecom 3,000.00 Cable and satellite TV 2,000.00 1,000.00 0.00 1984 1988 1992 1996 2000 2004 2008 2009 Figure 6.9 Stagnating network infrastructure investment, 1984–2009 Sources: Statistics Canada (2010b), Capital and Repair Expenditures—Broadcasting and Telecommunications (2001–2009) Cansim Table 029-0013 and Statistics Canada (2010c) Capital and Repair Expenditures on Construction and Machinery—Broadcasting and Telephone (1984–1993), Table 029-0033; CRTC (2002). Status of Competition in Canadian Telecommunications Markets.

1,000 900 800 700 600 500 400 (Millions, $) (Millions, 300 200 100 0 1996 2000 2004 2008 2009 Prog. Exp. (private conventional) Total CDN (CBC) News (CBC) News (private conventional) Foreign (pay & speciality) Foreign News (pay & speciality) Prog. (pay & speciality) (private) Figure 6.10 Television program expenditures, 1996–2009 Sources: CRTC, Communications Monitoring Report, various years; Statistics Canada (2007), Television broadcasting industry, by North American Industry Classifi cation System (NAICS), annual—Survey of Program Details, 1995–2007.

Spending on conventional television news and programming shows similar trends, while expenditures on foreign (mostly United States) programs have risen sharply to feed the expanded fl eet of cable and satellite television services. Indeed, the trends shown in Figure 6.10 comport with many studies that show

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that commitments to domestic television production continue to fall short of the pledges made by companies during regulatory reviews and when their acquisitions were approved (Auer 2007; McQueen 2003). Total television production grew slightly from $1.8 billion in 1998 to $2 billion a decade later in response to the growth of cable and satellite television channels, although full-time production jobs fell slightly (CFTPA 2010). This parsimonious approach, however, has come back to haunt the industry by making it more vulnerable to rights holders who have no qualms about playing off “old” and “new” media providers against each other for television and internet distribution rights, while leaving broadcasters badly equipped to benefi t from the huge growth of television worldwide (Miller 2007; Grant 2008). In other words, this is one more small reason for the current woes facing some media fi rms. Quebecor and Canwest are especially notorious for their “slash and burn” approach to the restructuring that inevitably follows the consolidation of ownership. Throughout the past decade, they have failed to meet pledges for television program production, eliminated journalists, centralized operations, and lost editors in chief and publishers under clouds of acrimony (Jim Jennings at the Toronto Sun; Russell Mills at the Ottawa Citizen) (Soderlund and Hildebrandt 2005). To be sure, CTVglobemedia and Torstar have also sought to revamp the conditions of media work, albeit with a little more fi nesse. Indeed, 281 positions were cut at CHUM on the day it was acquired by CTVglobemedia, while another 248 jobs were cut across the operations of the latter in 2009 (Toughill 2009). In contrast, Canwest riled journalists and the public alike by withdrawing from the Canadian Press news service and initiating its national editorial policy, a move that ultimately collapsed under the weight of its own stupidity (Soderlund and Hildebrandt 2005). Canwest also cut the number of its foreign news bureaus from 11 in 2000 to just 2 a few years later—exactly the opposite of what Canadians need as the country becomes deeply embroiled in complex and contested world affairs and military confl icts. The CBC, in contrast, has 14 foreign bureaus. In addition, just as Canwest was lining up its bid with Goldman Sachs for Atlantis Alliance, it eliminated 300 media jobs in the fall of 2007 and centralized its news operations in its Winnipeg, Vancouver, Montréal, and Toronto facilities. Despite all of this fl ailing about, uncontrolled debt fi nally triggered the fall of Canwest in 2009–10. Similar forces have continuously pushed Quebecor to the brink but without ultimately pushing it over. Nonetheless, massive debt caused Quebecor to delay investment in its cable networks in the early 2000s (Marotte 2000) and to push through aggressive changes to working conditions in the face of staunch opposition from journalists and other media workers. The Ryerson Review of Journalism refers to Quebecor’s “hatchet job” at The Sun in 2006, with another 120 jobs slashed and its production and printing operations centralized—a move that led Jim Jennings, the internationally experienced editor in chief of the Toronto Sun, to resign (Magarrey 2006). Such conditions have created

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confl ict between media workers and executives of the likes not previously seen in Québec or Canada. There have been at least nine lockouts in the past decade at Quebecor operations, including a protracted 15-month standoff at Le Journal de Québec that ended only after the Québec Commission des Relations du Travail (2008) ruled that its activities were illegal. Unbowed, Quebecor Inc. (2009) locked out reporters at the Journal de Montréal a few weeks later, arguing that newspapers everywhere were “in a state of crisis, given that the entire world is experiencing an economic crisis and is eager to embrace change.” Yet such opportunistic claims ignore the fact that, far from being innocents caught up in events not of their making, Quebecor, Canwest, Cogeco, Bell Globemedia, and so on took the lead in fostering the fi nancialization of the media to begin with. It is this reality that has come back to haunt them, while others are left to grapple with the underdevelopment of the network media system that has followed.

Concluding comments

Ultimately, this chapter has shown that the network media ecology has become larger and, by and large, remains highly profi table. The declining costs of information creation and distribution have yielded important new players and rendered the multiple economies of the network media ecology more visible. These same considerations, however, have also amplifi ed economies of scale and scope, leading to greater concentration and the rise of media conglomerates. Google’s dominance of search activities and its sizeable stake in social networking sites alongside Facebook also shows that the internet is not immune to consolidation. Yet the “fl y in the ointment” from the perspective of the media industries is that while the cost of reproducing the immaterial stuff of information may be zero in a hypothetical world, this potential is diffi cult to achieve in practice. The OECD’s observations about the music industry are relevant to most media on this point:

Contrary to earlier expectations, distribution of digital music is complex and far from costless … [and] requires … the digitalization of content, the clearing of rights, … online music storefronts, secure billing systems and new digital intermediaries (e.g. digital rights clearance, software such as Windows DRM, online billing). (OECD 2008: 269)

To put this in more familiar terms to media scholars, different media work by different rules, and these distinctions are not easily reconciled within a single fi rm (Garnham 1990; Miège 1989). Mediation is a constitutive element of modern societies and economies that is magnifi ed, not diminished, by communications media (Calhoun 1992). This also helps to explain why Google

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stands midstream between the “new” and “old” media. It furthermore reminds us, as Bernard Miège (1989) observed long ago, that the distinctive qualities of media and cultural activities can and often do throw up obstacles to the “capitalization of the cultural industries.” The fi nancialization of the media and the formation of media conglomerates according to the “slick rationality” of synergies ignored such realities, but the folly of doing so has been laid bare. To grasp contemporary conditions, it is essential to pay attention to this dialectical interplay between efforts to expand and accelerate the circuits of capital accumulation, on the one hand, and the distinctive aspects of media and cultural goods, on the other, as well as to the recursive effects of “discursive models” on the worlds that they represent and strive to create. These are also key elements for a critical cultural political economy of the media formulated along the lines that I have begun to sketch out in this chapter (Jessop 2008; Sayer 2001; Thompson 2010a). In the end, we can conclude that there are no clear cases in which specifi c media sectors are “in crisis,” although the two major global economic crises of the twenty-fi rst century have dealt punishing blows to some media conglomerates. In fact, at the core of the network media industries are a number of stumbling media behemoths that are ill-equipped to create the kind of open, digital network media system needed for the twenty-fi rst century. Canwest is the poster child of the bankrupt media conglomerate in Canada, but others such as TQS, Craig Media, and CHUM demonstrate the stern lessons of hubris, empire-building, and debt. Add Bell Globemedia’s retreat from convergence and the perennially indentured state of Quebecor, Rogers, and Shaw to this portrait, and it is abundantly clear that media conglomerates can, and sometimes do, fail. Ultimately, if free and open media really are essential to democracy, then surely we cannot let the fortunes of the latter hinge any more than they already have on those who have done so much to drive the current media system into the ground.

Notes

1 The latter, however, has been deferred to the federal courts to ensure that the CRTC has the authority to regulate “new media” in this way. 2 All of the tables, fi gures, and data in this chapter are based on the annual reports of the “big 10,” the Bloomberg Professional electronic fi nancial news service, FP Infomart and Mergent profi les, industry association reports, CRTC monitoring reports, and so on, unless otherwise stated. Citing these sources for each use would clutter the text, but readers can check my analysis against them. Only revenues from Canada and sectors that fi t the defi nition of the network media industries established at the outset of this chapter are included. Bell fi gures include its DTH service, internet access, and CTV and The Globe and Mail between 2000 and 2006. Data for CTVglobemedia are limited after 2006

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because it changed ownership and became a privately held company at this time. Revenues for the television industry include the CBC’s annual parliamentary appropriation. 3 Unless otherwise noted, all dollar values are in real dollar terms, with 2010 as the base year. Using current dollars would make my arguments easier by showing even more pronounced growth. All dollar fi gures in this chapter are in Can$. 4 Connectivity includes spending on telephone, cell phone and internet access services, and computers. The “media content and culture” category covers cable and satellite subscriptions, newspapers, magazines, movie theaters, audiovisual equipment, and attendance at sports, arts, and culture events. 5 In Figure 6.4, I use data obtained from a custom analysis of “Announced Mergers and Acquisitions (1/1/1984–3/19/2009),” assembled at my request by an analyst at Thomson Reuters. Data are on fi le with the author and available upon request. The remainder of 2009 was fi lled in using Factiva to search for all completed mergers and acquisitions in these sectors for 2009. Market capitalization as of December 31st for each year covered and for each of the major Canadian media companies included in my “big 10” category was obtained from the Bloomberg Professional fi nancial information service. 6 Bell sold 55 percent of its stake in the re-branded CTVglobemedia for approximately $1 billion, with roughly $685 million allotted to the CTV portion and an estimated $300 million to The Globe and Mail . Altogether, this was about quarter of the value of $4 billion originally assigned to the entity in 2000 (BCE 2001; CRTC 2006). 7 Data for magazines are incomplete, so specifi c fi rm revenues are not refl ected, except for Rogers ($184 million), which is placed under newspapers. Magazine-sector revenues ($2,394 million) are included in the total revenues for the “network media.” Including magazine revenues for specifi c fi rms, notably Quebecor, would raise the big 10’s share of total revenue.

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